48
TEHO INTERNATIONAL INC LTD.
Annual Report 2015
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.1 Basis of consolidation (cont’d)
(iii) Investments in associates (equity-accounted investees)
Associates are those entities in which the Group has significant influence, but not
control or joint control, over the financial and operating policies of these entities.
Significant influence is presumed to exist when the Group holds between 20% or
more of the voting power of another entity.
Investments in associates are accounted for using the equity method. They are
recognised initially at cost, which includes transaction costs. Subsequent to initial
recognition, the consolidated financial statements include the Group’s share of the
profit or loss and other comprehensive income of equity-accounted investees, after
adjustments to align the accounting policies with those of the Group, from the date
that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted
investee, the carrying amount of the investment, together with any long-term interests
that form part thereof, is reduced to zero, and the recognition of further losses is
discontinued except to the extent that the Group has an obligation to fund the
investee’s operations or has made payments on behalf of the investee.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated in preparing the consolidated
financial statements. Unrealised gains arising from transactions with equity-accounted
investees are eliminated against the investment to the extent of the Group’s interest
in the investee. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
(v) Subsidiaries and associates in the separate financial statements
Investments in subsidiaries and associates are stated in the Company’s statement of
financial position at cost less accumulated impairment losses.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.2 Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies
of Group entities at exchange rates at the dates of the transactions. Monetary assets
and liabilities denominated in foreign currencies at the reporting date are retranslated
to the functional currency at the exchange rate at that date. The foreign currency gain
or loss on monetary items is the difference between amortised cost in the functional
currency at the beginning of the year, adjusted for effective interest and payments
during the year, and the amortised cost in foreign currency translated at the exchange
rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the exchange
rate at the date that the fair value was determined. Non-monetary items in a foreign
currency that are measured in terms of historical cost are translated using the
exchange rate at the date of the transaction. Foreign currency differences arising on
retranslation are recognised in profit or loss.
(ii) Foreign operations
The assets and liabilities of foreign operations, excluding goodwill and fair value
adjustments arising on acquisition, are translated to Singapore dollars at exchange
rates at the reporting date. The income and expenses of foreign operations are
translated to Singapore dollars at exchange rates at the dates of the transactions.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation
on or after 1 January 2005 are treated as assets and liabilities of the foreign operation
and translated at the exchange rate at the end of the reporting period.
NOTES TO THE
FINANCIAL STATEMENTS
Year ended 30 June 2015
